The generation of black incomes is a continuous process. Black incomes re-enter the ‘white’ economy in a laundered form. A businessman’s aim in life is not to live in a house with gunny bags of notes, but to keep multiplying his money, for which he needs to buy ‘white’ assets. For example, builders take part of their payments in cash, but they don’t keep storing cash in underground pits; rather, they redeploy the cash in real assets on a continuous basis. At any given time, therefore, of the accumulated wealth generated through these processes, only a portion is in the form of notes, which is the amount needed for circulation. (Imagine a game of musical chairs, with notes as the person left standing.)

While demonetization may inconvenience traders to the extent to which they happen to have it in note form at the time, it is an interruption, not an eradication. Necessarily, the State has to reintroduce legal tender to replace the demonetized notes, whereupon the process can start again, as long as the activities themselves are not eliminated; and the State cannot keep on repeating demonetization, as it would destroy faith in the currency. Continue Reading »

Agrarian Crisis Pt. VIII

Effect of 25 Years of Neoliberal Policy: Tightening Grip of Parasitic Forces

The immediate causes of the present agrarian crisis can be located in the neo-liberal policies of the last 25 years. Among these are: the reduction of public sector investment related to agriculture, the reduction of bank credit to agriculture, the near-winding up of public sector extension services, the reduction of Government expenditure in the rural areas, the opening up of agriculture to imports, the reduction of public sector procurement and price stabilisation measures, the increase in administered prices of inputs, and the large-scale forcible acquisition of peasant lands for various projects. In this sense, it is not wrong to see the present agrarian crisis as one wrought by neo-liberalism. These neo-liberal policies in turn can be traced to the predatory interests of foreign investors and the Indian corporate sector (which itself has innumerable ties to global capital).

At the same time, all of these policy measures operate in the context of the existing structure of agrarian relations in India. We need to view various policies in this context in order to understand their impact. Continue Reading »

Peasants as Subjects

In previous sections of this article we have been talking about the agrarian crisis as if there were agreement about what it is. But in fact there are two basically opposed, rather mutually exclusive, views as to what the agrarian crisis is, and hence about how it should be addressed.

All ruling class programmes claiming to address the agrarian crisis ultimately separate the question of India’s agriculture from the question of those who work it. Their ‘solutions’ are defined in terms of the ‘productivity’ and the profitability of some future agricultural operators (this is what Modi means when he talks of ‘doubling’ farmer incomes), not in terms of the subsistence and productive capacity of the today’s actually existing peasantry. In essence, as we discuss below, this means maximising the returns to big capital, and assuring people that big capital will generate employment for those among them displaced.

The rulers in fact consider the existing peasantry to be the main obstacle to the sort of transformation they wish to bring about. For their aim is to create, within the sea of India’s agriculture, islands of high returns based on sizeable investments linked to global capital, while consigning the rest of the peasantry to a twilight of multiple subsistence employments in agriculture and elsewhere. Unsurprisingly, this ruling class programme faces resistance from peasants. Continue Reading »

5. Making Overall Sense of the E-commerce Hype 

by Rahul Varman, email: rahulv[at]iitk.ac.in

We would like to end by emphasising five significant points for further consideration.

  1. Corporatisation-Monopolisation of Disaggregated Services through Information Technology

As is evident from the discussion above we can see rapid consolidation and monopolisation under a handful of corporates, disingenuously called ‘start-ups’, of widely spread and decentralised services such as retail and taxis, as well as many other such services: hotels, ticketing, etc. With large scale evictions from land and migration from the countryside, very little employment generation in large scale manufacturing, and a deepening crisis in small scale manufacturing, and a considerable slowdown in construction and mining, there is an acute scarcity of employment. Services such as petty transport and retailhave been a residual source of some kind of employment For instance, in Kanpur, a very large number of those who were rendered unemployed by the closure of the textile mills have ended up as auto rickshaw drivers, cycle rickshaw operators or salesmen/shopkeepers. As consolidation and monopolisation happens in such services, capital intensity is bound to increase, much like what we have seen in manufacturing sector since the industrial revolution, closing the avenues of even such menial employment for a large set of people in a populous country like India. Already the likes of Uber and Google are making heavy investments for development of driverless/self-driving cars, and Amazon is making heavy investments towards robotisation of its warehouses and using drones for deliveries. BBC,[1] in a recent post, elaborates on Uber’s point of view: “But Uber’s big inconvenience is the fact it needs drivers, and so this line of research is about eliminating that final piece of the puzzle to boost profits even more (emphasis added).” Continue Reading »

IV. The End Game: Towards Monopolisation and Financialisation

by Rahul Varman. email: rahulv[at]iitk.ac.in

If we summarise what we have discussed so far, it appears that apart from the hype and fantastic valuations as well as a few billionaires, e-commerce has little to offer – massive losses, degrading/unstable careers, and a regulation-evading industry. In this section we will probe deeper and attempt to make overall sense of the overarching strategy of the e-commerce industry and its investors.

First and foremost, one medium- to long-term plan that each of the dominant actors seem to be following is what is called ‘last man standing’ or ‘winner takes all’. The whole strategy is hinged on the idea that each of them will be able to finish or subdue the thers to the point twhere only one or two of them remain as dominant players. So the whole idea is to burn cash and wipe out competitors before one really starts looking for profits. One can already see this process of consolidation taking place: while some new players are entering the fray, what has been happening for the last year or two is a strong movement towards mergers and acquisitions.

Continue Reading »

III. Employment Practices of the E-commerce Industry

by Rahul Varman, email: rahulv[at]iitk.ac.in

If e-commerce firms have been able to evade regulatory requirements with regard to customer and state obligations, their employment practices have gone even further beneath the radar, taking advantage of weak trade union movements and even weaker regulatory apparatus of the country with regard to labour laws. In this regard, all that has attracted media attention is the large ‘packages’ that e-commerce companies, flush with funds, were providing till recently to graduates of elite colleges like IITs and IIMs. These firms had become star campus recruiters until the recent controversy when they reneged on some of their commitments.

Flipkart has close to 35,000 employees today, and yet their employment practices remain almost a black box. We get a peep into them only when there is a moment of rupture, as in July 2015, when more than 400 deliverymen employed by e-retail companies in Mumbai went on strike protesting lack of basic working rights. What was most revealing was the charter of their demands: ID cards, fixed duty hours, toilets in delivery offices, overtime allowances, bike maintenance allowance, food and laundry allowance, payment to foot delivery boys of Rs 5 for shipment and Rs 10 for return shipment, ESIC cards, uniforms, weekly holidays and ‘exemption from work’ on public holidays, and many more such elementary labour rights. The corporate response was on predictable lines: “Flipkart, offers the best salary and benefit structure comparable to others in the industry.”[1] In spite of more than a decade of e-commerce, we are still debating[2] the law under which they should be held accountable: Factories Act (of course they will claim that they are not a ‘factory’ within the definition of this law) or the Shops and Commercial Establishment Act (in any case they have been claiming that they are not a shop!).

Continue Reading »

II. Regulatory Issues and E-Commerce in India

 — by Rahul Varman. email: rahulv[at]iitk.ac.in

Though the aspect of regulation hardly creates the sort of hype that valuations or cheap merchandise and rides do, from time to time we do hear about the regulatory strictures involving e-commerce entities by state agencies as well as the courts. Often this is not so much because of the vigilance of the regulatory authorities but contradictions with other constituencies, for instance the threat that e-retail poses to organised retail and even smaller physical retail units. The most fascinating aspect of this is the continuing debate regarding framing and defining the e-commerce services for applying the relevant regulations and laws.

For instance, while Flipkart, Amazon and other retailers have grown to a massive size and have been in existence now for years together (Flipkart is nine years old and has 35,000 employees on its rolls), the debate goes on regarding whether they are a ‘marketplace’ or a ‘retailer’. While the e-commerce entities claim that they are only marketplaces, a platform that brings potential buyers and sellers together at one place through technology (like a marketplace physically does), critics, that is competitors, various state agencies, and independent observers, object to this formulation. The basic objection is that these e-retailers have made massive investments in physical facilities such as warehouses and logistics to source and deliver the merchandise, and hence to say that they are nothing more than mere software is highly problematic. Amazon has 21 operational warehouses with more than 5 million cubic feet of storage space across India in cities like Ahmedabad, Delhi, Kolkata, Mumbai, Nagpur, Gurgaon, Pune, Ludhiana etc.[1] Continue Reading »